China Poised to Revive Cash-for-Clunkers Program, Official Says

May 28 (Bloomberg) -- China’s cabinet agreed to revive
financial incentives for consumers to trade in their passenger
cars to help increase demand in the world’s biggest vehicle
market, a government official said.

The cabinet approved the plan last week and relevant
ministries are working on details, such as the types of vehicles
covered and amount of state funding, according to the official,
who asked not to be identified because the matter hasn’t been
made public. The government is also conducting feasibility
studies on funding of new car purchases in rural areas, the
official said.

Government officials are under mounting pressure to revive
consumer demand after the economy grew slower than forecast and
vehicle sales slumped. China in 2009 rolled out a cash-for-clunkers program to counter the global financial crisis,
spurring 49.6 billion yuan ($7.8 billion) in new car purchases
the following year.

Chinese carmaker shares rose on mounting speculation the
government is preparing to take steps to bolster economic
growth. SAIC Motor Corp. climbed 5.2 percent, the most in four
months, to 15.54 yuan in Shanghai. Geely Automobile Holdings
Ltd., Great Wall Motor Co. and Dongfeng Motor Group Co. all rose
more than 8 percent or more in Hong Kong.

Chinese total vehicle sales declined 1.3 percent in the
January-to-April period, the worst showing since 1998 when
deliveries fell 1.6 percent, according to data compiled by the
China Association of Automobile Manufacturers.

Reuters reported earlier the government will soon provide
subsidies to rural residents who trade in used vehicles for
fuel-efficient new ones.